Bitcoin Price Climbed to $10,700 and Traders Turned Bullish
Currently, the Bitcoin (BTC) price unexpectedly surged by 6%, from $10,136 to as high as $10,743. Following the strong rally, analysts are becoming cautiously bullish for different reasons.
As of now, the factors that seem to be lifting investor sentiment are negative funding rates, BTC whale activity, and the U.S. dollar’s recent weakness.
Neutral or Negative
As of now, the funding rate of Bitcoin across various futures exchanges is either neutral or negative. And this is despite the price hovering over $10,000.
BTC futures exchanges utilize funding to guarantee the balance in the market. Also, it disincentivizes most of the market to avoid it from swaying to one side for a prolonged time.
In addition to that, if long contracts or traders betting on a Bitcoin price increase represent the overwhelming majority, they must pay short contract holders. On the other hand, the opposite will apply if short contract holders dominate the market.
As the funding rate becomes negative, it indicates that the majority of the market is shorting BTC. Usually, if funding rates stayed below zero, it makes a short squeeze and boosts BTC price. And this could also be a sign that the short bet will become overcrowded, increasing the chances of an upsurge.
DonAlt, a famous pseudonymous trader, tweeted, “It’s very, very weird seeing sentiment be this bearish, with neutral or negative funding above $10k. Don’t think I can remember a time where that has happened before.”
Also, the trader mentioned that he sees an absorption of selling pressure at $10,000. He noted that it seems like the people selling are on derivatives, closing his shorts to see the following week.
The overcrowded Bitcoin market with short contracts corresponds with several top whales possibly moving their holdings off the exchange.
Based on Whalemap, a group of on-chain analysts tracking crypto whale activity, top buyers moved their BTC last September 23.
According to the analysts, top buyers moving their funds have often been a bullish catalyst for Bitcoin, saying, “Top buyers were moving their coins yesterday. From my personal experience looking at this metric, next day after top buyers move, we go up.”
While the number of COVID-19 cases increases in the U.S., lawmakers became locked in a stalemate about the future of a much-needed stimulus package. And this is making strategists speculate on a weakening U.S. dollar.
Ahead of the initial rally, Michael van de Poppe, Amsterdam Stock Exchange’s full-time trader, stated that $10,700 to $10,800 is possible for Bitcoin.
The trader highlighted that the $11,200 to $11,400 price range could be a reasonable target once the dollar slowed down. He said that it looks like it is ready to test the $10,700 to $10,800 Bitcoin price mark, and it might even reach $11,200 up to $11,400 if the dollar weakens for a bit.
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